In Light of Snowden: How to Use Independent Contractors, in Law360July 29, 2013
Angel Gomez, a Member of the Firm in the Labor and Employment and Litigation practices, in the Los Angeles office, wrote an article titled "In Light of Snowden: How to Use Independent Contractors." (Read the full version - subscription required.)
Following is an excerpt:
Recent events connected with Edward Snowden have captured the world's attention. Snowden, an admitted leaker of national security secrets, was, at the time of the leaks, an employee of the well-known consulting firm Booz Allen Hamilton — Booz Allen Hamilton was a contractor to the National Security Agency, the federal agency which was collecting the leaked information.
Snowden's actions draw attention to a little-discussed area of importance to employers — trade secrets and independent contractors (ICs). ICs have become an important part of the American business landscape. While ICs have long been used for special projects, employers increasingly use ICs (instead of employees) to maintain flexibility regarding the size of their workforce or use ICs to seek to reduce tax or labor-cost exposure.
Sophisticated employers follow recommended "best practices" and include express trade secret provisions in their IC agreements — that is, language expressly stating that all trade secrets learned or developed by the IC during the engagement remain the property of the employer and that the IC is prohibited from making unauthorized use of the trade secrets during or after the engagement.
Many employers in the high-technology and other high-security fields have implemented elaborate procedures to limit IC access to and use of trade secrets, including security badges, passwords and daily log-in procedures. These facts represent the "gold standard" that can be introduced in later litigation against the IC who is improperly using trade secret information.